Yahoo Finance Gardening and fashion prop up UK retail amid inflation worries
A pick up in sales related to gardening, DIY and fashion propped up the ailing UK economy in May, as growth in spending faltered despite an array of bank holiday weekends.
Total retail sales increased by 3.9% last month, against a decline of 1.1% in May 2022, according to new data from the British Retail Consortium (BRC). This is below the three-month average growth of 4.7%. Sales growth slowed to the lowest level in six months.
"Brighter weather at the end of the month led to a much-needed pick-up in summer fashion sales, as well as gardening and DIY products," said Helen Dickinson, CEO at the BRC. "With consumer confidence still recovering from record depths, and continued tightening of household incomes, we are unlikely to see substantial sales growth in the coming months. But, with signs that inflation has possibly peaked, retailers are hopeful that confidence will continue to improve."
The three months to May also saw a 9.6% growth in food sales, outstripping the 12-month total average growth of 6.9%
"The wild card for the retail sector remains uncontrollable food inflation, which shows little sign of coming down in the near future, and this is having a significant knock-on effect on non-essential spending," said Paul Martin, UK head of retail at KPMG. "The grocery sector is the fastest growing part of the consumer wallet at the moment, so consumers are having to spend more of their money in the one area that is getting disproportionately more expensive."
Stubbornly high food inflation continuing and the prospect of further interest rate rises are set to impact consumer spending elsewhere, added Martin.
Inflation has surged in economies across the world as countries have emerged from the pandemic over the last year. Pent-up spending due to cash saved during lockdowns has spurred this on. Meanwhile, companies have struggled to meet the resulting jump in demand, as energy prices soared.
The consumer Price Index has jumped to as high as 11.1% in the last year, with the core rate of inflation consistently above the Bank of England's 2% target.
Watch: What is inflation and how does it affect you?
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